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Hochschild Mining: Rating Upgrade

Contributed by Fox-Davies Capital

Hochschild's share price has fallen to £3.58/share, primarily due to lack of short term growth and as a direct response to the falling gold and silver prices.

Our target price was £3.88/share. This was last calculated in late January when the December quarterly production figures were released. We have taken a hard look at the gold and silver prices currently prevailing and the quarter to date averages. These both suggest that our figures for the March quarter are too high and so we have lowered them to US$1,630 and US$30.1/oz respectively.

This had reduced our target price to £3.58/share. This figure is itself buoyed by the substantially weaker sterling exchange rate.

Hochschild is releasing its 2012 full year results on Wednesday the 13th of March, at which time the model will be rolled forward 6 months. Bringing the all-important new projects closer, thus exerting a positive influence on the target price. We are also anticipating increases in the ore reserves at the three major operations which should also be positive for the target price.